COLONIAL BONDS AS TRUST INVESTMENTS.

Auckland Star, Volume XIX, Issue 218, 15 September 1888, Page 4

COLONIAL BONDS AS TRUST INVESTMENTS.

LoßD.HEßSCHELL'sLiabiHtyofTr&stees Bill/recently passed, in the- House o* Commons, is likely to beneficially affect some colonial, bonds. We say some, because a clause in the Bill restricts the investment of such funds tot colonial securities "that at the time of investment mus£ be quoted in the .official list of thejLoiidon Stbct' Ekchaaie at not less than 105 per 4 per cents.,' or the equivalent of that figure for bonds bearing other rates of interest." fthis proviso ' will; preclude investors from utilising New Zealand bonds at present rates

In the Bill nine diff^ent classes of securities-are speafiedin> which trustees may -lawfully invest trust funds, such as .stocks or funds in which iricmey, subject to the-order of the Court, may Be invested, securities with' a Parliamentary guarantee of- interest, consolidated stock of the, Metropolitan Board of^ Works,?debenture, preference and guaranteed stocks of any railway company in the United Kingdom having paid dividends on itsV ordinary Stock during the royearsprecedinp the investment, Municipal- Corporation stocks, and stocks to be credited under the tiewv Local Goverhmenti^ct, together with colonial bonds; subject to the pro* viso mentioned above. * -j The London "Financial,. News," in commenting upon this BUI and1 its provisions, looks upon the; proviso as f.a very left-handed guarantee against Colonies of" shady) credit" like New Zealand/ and says it offers a temptation to them to; get their bonds artificially rigged ilpto the trustee level, though, Oh the other hand^it shuts out sound enough coloniaU bonds, which from temporary causes 'dropped btlow Uie qualifying 105. The '^Financial News" suggests that Sothithese?diffir ;culties ; could have been oyercomeby requiring the minimum to, have been attained for two or three consecutive years. It also expresses the qpinion that, " of all the new securities opened up to trustees, colonial bonds will be the most atttactive, because they Offer the largest return, anil will be easiest dealt in." . ! Our late Colonial Treasurer, Sir Julius ;Vogel, frequently expatiated, iri glowing terms, upon the 7 beneficial results that would accrue to'this colony if only trust funds could be legally invested in 'our.securities, and from iilus'r trations given by the " Financial News " Sir Julius was evidently quite warranted in .-delineating his - rose-coloured, pictures. : That paper, says: * "Next to banks; and insurance companies trustees are the largest and steadiest purchasers ■of gilt- edged securities. 'In: the market there are: one or two remarkable ■.ex-; ■ampies Of how their patronage may enhance the vUltre of ajstock. /Years ago the stocks; of JhejMetropolitan Board of Works were admitted- into the .charhied circle, of trust" investments. ■To that privilege ; . they chiefly owe thej very high appreciation they have attained^ and which (even the scandalous disclosures being made at Spring Gardens haiye not bejen, able to shake perceptibly. Metropolitan Board Three, per Cents, have in less than a year risen from 9? to .164, and are at this mom^ntacfcually higher than the Three per Cents, of the Impenal Governraerit;' The Board's Three-and-a-Half per Cents., which; within the^past twelyie months might haye been bought at 106, are now 113^,". p- ' ; ; 4it present "the: pnly colbni^V stocks

likely to be affectecT by the nevf Bill are New Soutli Wales,; Capes and Gey-, •lons, tlie first beiog the most sought after, as they are of long duration and unirapeachaDle security. New South Wales three and a half per cents, are now purchasable' at 103 %;■ which represents an income of three-quarter per cent higher than can be obtained from English Consols, and as th ere are sixteen and a half million sterling of them there will always be* ar free market for the trustees' operations^ . .